Fri, Dec 27, 2013 - Page 14 News List

Ezfly to experience slower growth next year: analysts

By Kevin Chen  /  Staff reporter

Ezfly International Travel Agency Co (易飛網國際旅行社), the nation’s sixth-largest online travel agency in terms of daily Internet traffic, may see its growth in sales slow next year following blistering growth over the past few years, analysts said yesterday.

The company’s sales grew by a compound annual growth rate of more than 30 percent from 2010 to last year and are expected to increase by 16.6 percent to NT$1.51 billion (US$50.3 million) this year from last year, SinoPac Securities Investment Service Corp (永豐投顧) analyst Yili Chen (陳宜里) forecast yesterday.

Sales for next year, however, could rise at a slower pace of 8.3 percent, to total NT$1.63 billion for the year, Chen said in a client note.

Jih Sun Securities Investment Consulting Co (日盛投顧) analyst Huang Chi-jieh (黃啟杰) also expects the company’s sales to record a year-on-year increase of 17.65 percent this year but only 1.76 percent next year.

“Driven mainly by its Northeast Asia route business, Ezfly has seen its sales increase substantially this year. However, with no remarkable continuity in holidays next year, the company is likely to see weaker growth momentum going forward,” Huang said in his note to clients.

CHINESE EXPANSION

The company, which started trading its shares on the GRETAI Securities Market yesterday, has set out plans to explore business opportunities in China and hopes to benefit from the Taiwan-Japan open-sky agreement as well as the depreciation of Japanese yen.

Ezfly has also expanded its product offering by cooperating with international online travel agencies such as Expedia, Travelport and Time Design in order to capture outbound travel demand in Taiwan.

Shares in Ezfly closed at NT$88 on its GRETAI debut, up 95.56 percent from its initial public offering price of NT$45, and far higher than their closing price of NT$82.27 on the smaller Emerging Stock Market (興櫃市場) in the previous session.

But Yuanta Securities Group (元大證券) analyst Yeh Chia-wen (葉嘉雯) said she did not expect Ezfly to benefit much from its plans to expand into China and Japan.

“Taiwanese travel agent investment in China is still reliant on the approval of the cross-strait service trade agreement, so a real earnings contribution is unlikely in the next three to five,” Yeh said in a report yesterday.

GROWING PAINS

“While Japan remains a popular travel destination for Taiwanese travelers, after two years of substantial outbound growth to Japan, we believe maintaining strong growth will be a challenge,” Yeh added.

In the first 11 months of the year, Ezfly reported NT$1.39 billion in sales, up 16.73 percent from the same period last year.

The company focuses on short-haul outbound travel business with its key market of Northeast Asia accounting for 48 percent of sales in the first 11 months.

That was followed by domestic travel business with 20 percent, Southeast Asian tours at 9 percent and Greater China tours at 8 percent.

NET GAINS

Ezfly’s net profit for the first three quarters totaled NT$41.19 million, an increase of 227 percent from NT$12.61 million last year. Earnings per share in the nine-month period stood at NT$2.23, up from NT$0.72 last year.

SinoPac forecasts Ezfly’s net profit to rise 147 percent year-on-year to NT$530 million this year and increase another 20 percent next year to NT$640 million, while Jih Sun predicts the company will post NT$610 million in net profit this year, a 185 percent increase, but only NT$540 million next year, an 11 percent contraction.

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